Boycott legacy hits Arla comeback

By Chris Mercer

- Last updated on GMT

Related tags Arla Middle east Arabian peninsula

Uncertainty continues to hang over Arla Foods in its key Middle
East dairy market, after it said sales there have been slow to
recover from a region-wide boycott against its products.

Arla said its sales in the Middle East were still low, despite having its dairy products back on most shop shelves across the region.The statement indicates that Arla may be in for a long struggle if it is to win back its successful business in the region.

Consumers in the Middle East stopped buying Arla's products in February in protest at cartoons of the prophet Muhammad published by a Danish newspaper. The dairy firm estimated it would lose €53m of its €429m annual sales in the region this year as a result.

In Saudi Arabia, where Arla sells two-thirds of its products, turnover is now still only 10-15 per cent of pre-boycott levels, the firm has announced.

"In the Saudi market, many consumers are continuing to avoid Danish products. Either because they wish to continue the boycott or because they've become used to buying competing products,"​ said Finn Hansen, Arla's divisional director.

The Scandinavian dairy group, which had enjoyed huge success with its Lurpak butter and Puck cheese brands across the Middle East, said it had regained no more than a fifth of pre-boycott sales across the region as a whole.

It said earlier it aimed to recover 50 per cent of pre-boycott volumes by the end of 2006.

Market research group Euromonitor​ released a report during the boycott suggesting other foreign dairy firms may look to capitalise on Arla's misfortune.

French dairy group Danone, already the regional dairy market leader, could almost double its current market share to 18 per cent by swooping on Arla's cream sales, Euromonitor said.

News that rivals appear to have indeed poached Arla's business in Saudi Arabia is a blow to its expansion plans for the Middle East.

Louis Honoré, Arla spokesperson, previously told​ that the firm was planning a multi-million Danish Kroner investment in the Middle East region, including factory extensions and a pilot plant to test new products and packaging.

Related topics Manufacturers Arla Foods

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